rescuing and recovering aerospace supply chains at …€¦ · components for aircraft...

PEOPLE NEW BUSINESS SUPPLY CHAINFINANCE

£INNOVATION

PRIORITIES AND ACTIONS

RESCUING AND RECOVERING AEROSPACE SUPPLY CHAINS AT THE HEART OF UK MANUFACTURING

SUPPLY CHAINS REACH WIDE AND DEEP

02 MIDLANDS AEROSPACE ALLIANCE

The Midlands is home to a major aerospace industry cluster, with over 300 supply chain companies forming one of the largest regional networks internationally. The region is a leader in advanced aerospace manufacturing. The cluster’s contribution to the economy is driven by

global demand for high-technology aero engines, complex aircraft systems and precision-engineered components for aircraft manufacturing giants such as Airbus and Boeing. Aerospace in the Midlands grew rapidly over the last 15 years, with output doubling and employment increasing by more than half.

Recently, the industry has been hit by a triple threat. Brexit raised costs by requiring UK aerospace companies to build up stocks of aircraft parts so there would be no interruption to supply during the transition; Boeing’s 737 MAX programme was suspended, hitting suppliers for the aircraft, and then Covid-19, the most devastating, struck. Air travel collapsed by over 90% overnight, leading to one of the worst ever meltdowns in aerospace history as aircraft no longer needed to be overhauled and airlines cut their orders for new aircraft. The shockwaves have been coursing through aerospace supply chains with large and small companies forced to downsize their operations and workforce rapidly.

AEROSPACE SUPPLY CHAINS ARE VITAL

People don’t fly

Airline incomes hit

Aircraft purchases suspended/ reduced

Supply chains slow/stop

Costs and workforce are cut

Marine Medical Motorsport Industrial gas turbine

Automotive Airframe

Research organisations

Supporting services design,

training, IT

Manufacturing equipment

Equipment for design,

engineering, testing

Midlands aerospace cluster:1/4 of the UK’s industry

Core aerospace

Support sector

Diversified market

Electronics

Wiring, connectors

Pipes, hoses

Mechanical & structural

parts

Metals processing

Materials suppliers:

metals, composites

Control systems

Major mechanical components

Systems for engines/ airframe (e.g. fuel)

Gas turbine propulsion

MIDLANDS AEROSPACE ALLIANCE 03

Although these are unprecedented times and it’s therefore challenging to make reliable forecasts, we’re expecting the lowest point for the industry to come later in 2020 before demand begins to pick up in 2021. However, we anticipate that it could take until 2025 for the industry to recover and return to its previous growth trajectory.

Aerospace suppliers that work on varied aircraft programmes, and those that also supply other market sectors in the Midlands engineering supercluster, for example rail, should be in a stronger position than those dependent on the production of the large, long-haul civil aircraft that have been hardest hit and which the Midlands cluster is more dependent on than most. But conditions are tough for all.

THE UK AEROSPACE INDUSTRY - INCLUDING SUPPLY CHAINS - BRINGS IN £36BN IN REVENUE AND PROVIDES OVER 250,000 HIGH-VALUE JOBS.

We must therefore take decisive measures to ensure that supply chain companies survive this crisis and bounce back with capabilities, capacity and competitiveness intact. Action needs to take place nationally and regionally.

In the Midlands, we’re bringing together aerospace experts across industry, academia and government to work through the critical and complex issues, helping rescue, recover and grow aerospace, as one. Our five-point plan uses insight, research and deep industry knowledge to address the key priorities and pinpoint the concrete actions that are critical to take now in order to return to growth and prosperity in future.

OUR FORECAST

** Revenue gap: 1/4 ‐ 1/3 revenue lost for four years (MAA forecast)

**Midlands real‐terms turnover post‐Coronavirus (MAA forecast)

*Midlands aerospace real‐terms turnover

Benchmark: Airbus/Boeing single/twin aisle aircraft

deliveries

* FTE employment in Midlands aerospace

Dip is Boeing 737 MAX grounding effect (gold line), relatively small impact in Midlands (start of red

stripe)

What future for jobs?

Airbus/Boeing output projection pre‐

Coronavirus (MAA forecast based on A/B market forecasts)

0

50

100

150

200

250

300

0

50

100

150

200

250

300

Index 20

05=100

2020





deliveries



stripe)




0

50

100

150

200

250

300

0

50

100

150

200

250

300

Index 20

05=100





deliveries



stripe)




0

50

100

150

200

250

300

0

50

100

150

200

250

300

Index 20

05=100

Midlands aerospace cluster: projecting Covid-19 impactRecovery assumes companies and people stay in industry. *2005-19 MAA annual survey. **2020+ = MAA forecast based on Midlands sub-sector portfolio data and Teal Group forecasts. All data real terms, 2005 = 100


We need to renew our vision and strategy for aerospace manufacturing supply chains so we can work together with

all stakeholders to not only survive and recover from the current crisis but create the strongest foundations for renewed growth and prosperity

THE VISION OUR AIM IS FOR THE MIDLANDS TO:• Remain a world leader in advanced aerospace technologies across an extensive supply chain.

• Be a thriving hub for low-carbon aviation innovation through industry and research centres.

• Support high-value engineering jobs and attract the best talent.

The industry showed the power of collaboration when it came together as part of the UK Ventilator Challenge. This didn’t involve just the big players, but the whole supply chain, with more than 40 Midlands and MAA member companies contributing.

We believe there are some key principles that will help us build towards this vision:

THINK BIGAerospace is a global success story for the UK and can get back to that. We must remain ambitious so, when demand picks back up, we will emerge among the leaders internationally.

FOCUS WIDEThere is a lot of attention on aerospace primes but the whole manufacturing base must be factored into decisions. We must be inclusive and wide reaching.

ACT TOGETHERIt is perilous to make decisions only in a top-down way. Supply chain companies have significant insight and intelligence and are always a vital part of the solution.

BE TRANSPARENTThe aerospace industry is notoriously sensitive to sharing information but it’s crucial that transparency of non-confidential data is increased to enable effective planning and decision making for the whole ecosystem.

HAVE INTEGRITYOrganisations must act responsibly, making decisions in a way that considers the long-term impacts on the whole industry, not each one individually.

WE ARE AT OUR BEST WHEN WE COLLABORATE. WE CAN PROSPER AGAIN TOGETHER.

THE FIVE-POINT PLAN


PEOPLE

PEOPLE: ENSURE SAFE AND PRODUCTIVE WORKPLACESSafety is a top priority. We also need to protect capabilities and skills.

NEW BUSINESS

NEW BUSINESS: OPPORTUNITY CREATIONThere are still real business opportunities but companies may need to be inventive to widen markets.

FINANCE

£ FINANCE: ‘RE-LAUNCH’ SUPPORT FOR SUPPLY CHAIN COMPANIESA race to the bottom in terms of price could have damaging effects so companies need to think long-term.

SUPPLY CHAIN

SUPPLY CHAIN: DEVELOP A RESILIENT SUPPLY NETWORKThe whole supply chain needs to be factored into planning.

INNOVATION

INNOVATION: TURN IDEAS INTO REVENUEInnovation can be key to increasing productivity and diversifying in order to survive the crisis.

Our five-point plan lays out five key pillars and over twenty actions that will be critical to rescuing and recovering aerospace supply chains and best enable a return to growth and prosperity as the market recovers.

A COLLABORATIVE PLAN

INDUSTRY SURVEY

RESPONDENTS

5656LOCAL

STRATEGIC PARTNERSHIP

11INDUSTRY AND STAKEHOLDER

ORGANISATIONS

240240AEROSPACE

EXPERTS

2222REGIONAL

AEROSPACE BUSINESS LEADERS

6060

Our plan has been developed in collaboration with experts and organisations across industry, academia and government to ensure it embraces the needs of aerospace as a whole.

LEADING AEROSPACE UNIVERSITY

11

THE CRITICAL ACTIONS

SAFE WORKPLACES Continue to share industry best practice as government advice evolves.

TRANSITION TO A ‘NEW NORMAL’ Maintain higher levels of flexibility and remote working where possible to help retain talent.

REDEPLOYMENTPreserve the skills and capabilities of our sector by helping find alternate employment.

KEEP APPRENTICESHIPS OPEN National funding and local support is required for the future skills base.

SUPPORT INDUSTRY ENTRANTS Current trainees need to be able to enter the industry and must not feel abandoned.

PEOPLE


PROMOTION Work together to promote the advanced capabilities of the Midlands aerospace network.

INFORMATIONShare market knowledge and updates about changing demand with all supply chain tiers.

DIVERSIFICATIONShare and enable opportunities for aerospace companies to enter new markets.

DIGITALExplore digital solutions to support companies while the crisis continues.

EXPLOREOrganise regional ‘meet the buyer’ events for lower tier companies and build renewed outreach to global primes.

NEW BUSINESS



SAFEGUARD WORKING CAPITAL Help companies manage working capital until aircraft demand turns up.

CASHFLOW SUPPORT FUNDOrganise finance that is repayable based on business performance.

ON-TIME PAYMENT Large firms must pay suppliers as originally agreed.

THINK BEFORE APPLYING PRICE-DOWN PRESSURELarge firms should be creative, agreeing sustainable, long-term cost targets with suppliers.

FINANCE

£

UPGRADE STRATEGIC PLANNINGSuppliers need to rapidly upgrade strategic planning and operating procedures.

IMPROVE ORDER BOOK PLANNING AND FORECASTING Large customers must give clearer forecasts so suppliers can plan with better data.

BOTTOM-UP FEEDBACK Large customers need to listen to impact signals from lower-tier suppliers to minimise disruption.

COMMIT TO INTEGRITY ALONG THE WHOLE SUPPLY CHAIN Action to ensure ethical practices; this may include a charter with teeth.

RESPONSIBLE SOURCING Companies receiving UK government aid should source in the UK where the capability exists.

MOBILISE REGIONAL CLUSTERS Share best practice, collaborate and achieve consolidation and scale through networks.

SUPPLY CHAIN



UNLEASH BOTTOM-UP INNOVATIONEnable supply chain companies to find and create new markets.

SYSTEMATIC CROSS-INDUSTRY TECHNOLOGY DEVELOPMENTCreate and resource demand-led innovation to pull technology from one sector to another.

INVEST IN R&D AT SCALE TO MAKE AEROSPACE TRULY SUSTAINABLEFoster real, authentic participation by smaller supply chain companies.

INNOVATION

As the current crisis is an evolving one, our plan will develop in line with changes to our economy, environment and industry.

One of our key priorities, right now, is to identify resource requirements and delivery options.

We will be talking with our peer UK regional aerospace clusters, and with national organisations (including Make UK, the Aerospace Growth Partnership, ADS, Government and Unite the Union) to align our activities with national

MOVING FORWARDinitiatives that stimulate flying, support airlines, bring forward defence projects and invest in low-carbon R&D.

We are also coordinating action with regional bodies including Local Enterprise Partnerships and the West Midlands Combined Authority as well as our region’s key research centres.

And we’ll continue to share best practice in support for supply chains with the 45 members of the European Aerospace Cluster Partnership.

TOGETHER, WE CAN MAKE AEROSPACE FLY AGAIN.


T: +44 (0) 2476 430250E: [email protected]

With thanks to:

• Representatives from Midlands aerospace companies who responded to our survey covering the five pillars of our plan and the priorities.

• Regional aerospace leaders sitting on our board or one of our three working groups who contributed to in-depth debates.

• Leadership colleagues at the Black Country Consortium which is responsible for the aerospace sector strategy for the West Midlands Combined Authority.

• Everyone who participated in the Aerospace Unlocking Potential series of virtual events and meetings including our partners at the University of Nottingham, industry experts, consultants and hundreds of additional organisations. The £20 million ERDF-funded Aerospace UP programme supports aerospace innovation in supply chain companies located across eight Midlands local enterprise partnership areas.

rescuing and recovering aerospace supply chains at …€¦ · components for aircraft...

Documents